Protest builds over Pa. Medicaid contracts
Winning a contract to manage part of Pennsylvania's $12 billion in Medicaid benefits is a big prize.
That's why losing bidders with a long-term presence in the market of 2.3 million participants are not taking lightly the Pennsylvania Department of Human Services' decision last month to cut them out of all or part of Medicaid management in Pennsylvania.
Insurance giants UnitedHealthcare and Aetna came out empty-handed in January. AmeriHealth Caritas, a subsidiary of Philadelphia's Independence Blue Cross, was bumped out of a region that stretches from the Lehigh Valley to Fulton County and where it had the largest market share in December.
Unhappy losers are common, but in this case they have more fodder for protest because of "irregularities" in the selection process.
Lawmakers, urged by constituents who participated in the bidding, have written to Gov. Wolf, Attorney General Josh Shapiro, and Auditor General Eugene DePasquale, urging them to examine a process that one lawmaker said appeared to be "a badly managed mess from start to finish."
DePasquale said Wednesday that he had heard from Democrats and Republicans in the Senate and the House of Representatives and planned to meet with losing bidders Thursday.
"We're beginning to do our due diligence to look into the issue," he said.
The governor's office and the Department of Human Services did not respond to requests for comment on the controversy surrounding the Medicaid program known as Health Choices, which carves the state into five zones.
DHS, led by Secretary Ted Dallas, started the process to award new contracts in September 2015.
Last April, DHS announced its first selections. Aetna, which lost all but one zone, appealed to the Commonwealth Court, where a judge expressed "real concerns about the credibility of the procurement process."
After Aetna won a preliminary injunction in July blocking DHS from negotiating with winners, DHS started over.
The second round went no better.
Robert F. Matzie (D., Beaver and Allegheny) wrote last week in a letter to Shapiro and DePasquale that the second procurement "has been marred by a myriad of issues: a DHS math error causing awards to be rescinded yet again; DHS negotiating with a successful bidder during the statutory 'black out' period and allowing that bidder to modify its proposal; and overhauling how it weighed factors in awarding points with notifying bidders."
Matzie said he heard from UnitedHealthcare employees who live in his district.
UnitedHealthcare wrote in an email this week that it strongly disagreed with the DHS decision. The company currently serves three zones. Last April, it was picked for all five zones and this past month for none. The new contracts are planned to go into effect June 1.
Aetna declined to comment. AmeriHealth Caritas did not respond to a request for comment.
Centene Corp., of St. Louis was among the big winners, winning a new foothold in the state with three zones. Centene told investors this month it expected to pick up 75,000 to 100,000 members.
In all, roughly 720,000 Medicaid beneficiaries, more than 30 percent of the total, will have to choose a new provider, lawmakers said.
State Rep. Brian Sims (D., Philadelphia), whose district includes the headquarters of Independence Blue Cross, said he was worried about such a massive shift in providers.
He wrote to Gov. Wolf, urging him to "investigate the irregularities in this procurement and, in view of the human toll of these awards, consider initiating a new, fair, transparent, competitive, and error-free procurement process."